53 Responses to Proposals for the Banking System, Treasury, Fed, and FDIC (draft)

I have been working on finding some common ground between MMT & other bank reform proposals, esp. positivemoney and related plans. Curious what you would reply to one of the comments about your Huffpo version:

“Warren Mosler concludes from his brief review of monetary history “The hard lesson of banking history is that the liability side of banking is not the place for market discipline.” This is precisely the point of focus for Positive Money. Our proposals remove the “mission critical” aspect of the monetary system – people’s money – from the liability side of banking and the vagaries of the market, isolating the payments system from the questionable liquidity and ultimate solvency of banking institutions. And that is all we seek to do. We do not propose any changes to the management of banks’ assets, which is where Warren directs his proposals, because we feel that is the wrong place to start. Getting the liabilities side right will eliminate the systemic significance of current concerns – securitisation and inter-bank lending are at present primarily liquidity management practices. Only once the balance between financial stability and profitability has been realigned by this will it be apparent whether and how asset management practices should be regulated.”

WOW, Really a great document. in particular i love the “ex-nay” on libor in u.s. and “ex-nay” on subsidiary off balance sheet stuff. If they aren’t allowed to have credit default insurance, they’ll make sure they write “good” paper!

warren, question:
do you think repealing glass-steagal had a big part in facilitating this mess?